Just who are the 1%? One percent of the American population would be 3.1 million people. But our income statistics come from households, not individuals. The total number of households in the USA is about 116 million so one percent of those housefholds would be 1.2 million. The median, or the “averge,” household income is $50,000. The mean is $65,000 which means half of all housefholds have an income below or above that amount.
Moving along we find that a household earning $100,000 or more lies in the top 16% of all households and a household income of $150,000 or more places in the top 5% of all households. Over $250,000 in household income,the benchmark income used by President Obama in discussing tax hikes, places in the top 1.5%. So a household income of $320,000 or so should place you in the top 1% or some 1.2 million of all households.
Interesting numbers these. The average medical doctor’s income in the USA is over $250,000 so we can assume a large number of the top 1% are doctors. There are about one million doctors in the USA so they will account for a large part of those 1.2 million households.
Come to think of it, the average household with two professionals would probably have an income of over $150,000 which would place them in the top 5%.
My point is that the top 1% is not the exclusive haunt of the “super rich” fat cat Wall Street con artists but includes many who are just merely successful people. In fact I would not be surprised that many who read these blogs fall into this group.
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I’m always puzzled by the use of ‘income’ in discussions of household (or individual) financial status. What is ‘income?’ Is it Adjusted Gross Income (from the tax form) or maybe ‘taxable income’ (from the same forms), or does it refer only to earned income? Back in college professors said ‘define your terms;’ it would help in these discussions if we could agree on what we are using.
Another factor in this discussion is the whole question of ‘net worth.’ Folks my age who could easily be described as well-to-do don’t qualify for 1% status because their high ‘net worth’ doesn’t show up in AGI, taxable income, or salary. Careful tax planning and investment allows these folks to live very well but have little to do with the IRS.
So, who should be on the list and what, specifically, is the criteria.
David
Excellent question. Having “created statistics” as a government official and private business man I have a healthy scepticism for any “numbers’ thrown around in the political arena. Household income comes from tax returns and/or questions asked during the tne year census. There are no other generally accepted records.
There are various estimates of how many “millionaires” there are in the USA. The usual calculation used to determine who is a millionaire is to determine net worth less real estate. Since for most of us real estate constitutes our main source of “wealth”, this calculation misses most of us. In any case there are an estimated 3-6 million millionaires in the USA. Thus the “One Percent” could simply mean “millionaires.”